Starfish Corporation, in preparation of its December 31, 2020,financial statements, is attempting to determine the properaccounting treatment for each of the following situations. 1. As aresult of uninsured accidents during the year, personal injurysuits for $261,000 and $697,000 have been filed against thecompany. It is the judgment of Starfish‘s legal counsel that anunfavorable outcome is unlikely in the $261,000 case but that anunfavorable verdict approximating $410,000 will probably result inthe $697,000 case. 2. Starfish‘s deep sea exploration divisionconsisting of operations in the Marina Trench is uninsurablebecause of the special risk of injury to employees and losses dueto high pressure. The year 2020 is considered one of tinesafest(luckiest) in the division’s history because no loss due to injuryor casualty was suffered. Having suffered an average of twocasualties a year during the rest of the past decade (ranging from$25,000 to $1,000,000), management is certain that next year thecompany will probably not be so fortunate. 3. Starfish Corporationowns a subsidiary in a foreign country that has a book value of$21,600,000 and an estimated fair value of $30,890,000. The foreigngovernment has communicated to Starfish its intention toexpropriate the assets and business of all foreign investors. Onthe basis of settlements other firms have received from this samecountry, Starfish expects to receive 60% of the fair value of itsproperties as final settlement.

1. What is the amount of legal expense recorded with respect touninsured accidents?

2. Does Situation 1 warrant a footnote to the financial statements?1=Yes, 0=No

(assume materiality)

Situation 2

3. What is amount of legal expense recorded with respect to specialrisk of injury to employees?

4. Does Situation 2 warrant a footnote to the financial statements?1=Yes, 0=No

(assume materiality)

Situation 3

5. What is the amount of loss to record with respect to theexpropriation of the foreign sub's assets?

6. Does Situation 3 warrant a footnote to the financial statements?1=Yes, 0=No

(assume materiality)